Test 1(1-3) - Chapter 1-3 Test Decision making process 1....

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Chapter 1-3 Test Decision making process 1. Id the issues 2. Gather information 3. Id alternatives 4. Select the option that will most likely result in the desired objective Purpose of accounting (accounting system) is 1. Analyze transaction – what is it? 2. Bookkeeping task (double entry system) – record it! 3. Structure the information – general reports Balance sheet – assets and liabilities Income statement – revenues and expenses Cash flow statement Every transaction must have a minimum of two entries (debit and credit) p.5 Analysis - > bookkeeping - > evaluation Key components of accounting 1. Quantitative 2. Financial 3. Useful 4. Decisions p.6 Business – goal: general revenue, make money Non-profit organization – goal: provide services Business pays income taxes and non-profit organization does not pay income taxes Two roles of accounts 1. Accounting cycle – analyzing, recording, classifying, summarizing, and reporting the trasactions of a business 1. Advising p.8 The accounting cycle 1. Internal reporting (Management Accounting) ex. Budgets, cost analyses, divisional performance reports. 2.
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Test 1(1-3) - Chapter 1-3 Test Decision making process 1....

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